MASI

• Closed the sale of Sound United to Harman in September. - Announced expansion of strategic partnership with Philips in early September, with potential for greater share expansion in advanced monitoring over the next 5 years. - Positive results from INSPIRE study showing 0 undetected hypoxemia event rate and spot-on accuracy for critically ill adult patients regardless of skin tone. - Focus on 3 waves of growth: elevating commercial excellence, accelerating intelligent monitoring (using AI/machine learning for sensors), and innovating wearables. - Strong contracting performance with incremental value of new contracts secured in Q3 reaching $124 million, a 48% year-over-year increase, and unrecognized contract revenue expected to be realized within 12 months at $507 million, up 17% year-over-year.

• Tightened full-year revenue guidance to $1.510 billion to $1.530 billion. - Raised operating margin guidance to 27.3% to 27.7%. - Raised earnings per share guidance to $5.40 to $5.55, driven by improvements in operating margin, share repurchases, and reduction in interest expense.

Healthcare revenue was $371 million, representing 8% growth. Consumables grew 1% this quarter (compared to 20% growth in Q3 2024), while capital equipment and other revenues grew 67% this quarter (compared to -33% decline last year). On a multiyear basis, consumables have double-digit compound annual growth rates and capital growth is low to mid-single digits.

Q: Great to see the strong performance this quarter. How do we think about the rest of the year and potential for further outperformance? What are the drivers?

A: Micah Young mentioned expecting a strong finish in Q4 with accelerated consumable growth as unusual comps normalize. Catherine Szyman noted focus on commercial excellence and share buybacks contributing to EPS growth.

Q: Katie, can you expand on share gains in Philips?

A: Catherine Szyman said Masimo was under-indexed in Philips' installed base globally and sees opportunity to close the gap over the next 5 years.

Q: Michael Polark asked about 1% consumables growth and reassurance on return to normal growth. What's the outlook?

A: Micah Young explained that last year's tough comps were due to factors like inpatient admission growth and timing, and on a multiyear basis, consumables have double-digit growth. Catherine Szyman noted expected increased shipments in Q4.

Q: Michael Matson asked about wearables strategy and AI algorithm timing. What's the status?

A: Catherine Szyman discussed ongoing pilots for wearables like Radius VSM, W1, and Radius PPG, and that the opioid monitoring algorithm clearance is in progress with submission to get it on monitors expected towards end of next year.

Q: Matthew Taylor asked about Q4 guidance and Philips agreement. What's the outlook?

A: Micah Young said Q4 growth should come from accelerated consumables growth, partially offset by softness in capital. Catherine Szyman discussed the postmortem on Philips share gain and the opportunity to close the gap over the next 5 years.

Q: Vikramjeet Chopra asked about capital allocation framework and influence of Philips partnership on product roadmap.

A: Micah Young mentioned leaning into share repurchases and tuck-in technologies. Catherine Szyman said the partnership will help drive growth but product mix change is not dramatic in short term.